Fenwick Goods Ltd (Fenwick Goods) is a small pharmaceutical company. It is perhaps best known for its product Fenwick Air Fresh, as commonly used in many household bathrooms across the nation. Fenwick Goods has 3 directors, Jack, Jill and Jimmy, who are also significant shareholders as each of them hold around 25% of shares in the company. The remaining shares in Fenwick Goods are held by several other individuals and small companies. Jack, Jill and Jimmy founded Fenwick Goods back in 1988 after meeting in chemistry class and deciding to go into business together. However, in recent times, the relationship between Jack, Jill and Jimmy has broken down. Jimmy feels that Jack and Jill want to remove him from the company as the two have grown very close to one another. Jack and Jill have been excluding Jimmy from their discussions about Fenwick Goods - Jimmy has no idea what is going on in the company. Jimmy decides to take a look at the company's books, and discovers by chance that Jack and Jill recently transferred the company Ferrari (worth around $300K) into Jack's name. Jimmy also discovers that Jack and Jill approved large marketing fees to an unknown company which, upon further investigation, appears to be owned by Jill. When Jimmy asks Jack and Jill for their clarification on these transactions, Jack and Jill tell Jimmy that he has "misinterpreted the books" and that Jimmy "has not been paying attention to his job"
Q) Have Jack, Jill and Jimmy breached their directors duties? Outline which directors duties they may have breached. Make sure you use I.R.A.C. to structure your answer and make reference to the relevant sections from the Corporations Act 2001 (Cth) and case law.
Answer:
Yes, Jack, Jill and Jimmy has breached their directors duties. There was a break in their relationship.
The general duties of directors include acting care and diligence. A breach of this duty leads to risky financial transactions without foreseeable benefits to the company. They should act on behalf of the corporation and its best interest with an approriate duty of care in all times, they must act with loyalty to the corporation and its shareholders.
The directors of the company are responsibile for promoting the interest of the company.Its the companies accounts/ books of records properly maintained helps in the success of the company and also benefits the shareholders.
In this case the directors acted against the companies interest which badly affected the third persons confidence as well as that of the investors.
According to the corporation act 2001, directors should not take benefits from the third party and should avoid conflict among the partners.
In this case the other two parties has breached their directors duty by avoiding the other partner and making false statements and misleading the statement of accounts.This badly affect the reputation of the company and the investors or the creditors reliability.
In such case Saunders law will be prevailing here, if any directors breach their duty they will have to face civil and criminal offense.In this case the third person may approach the court and can reveal all the statement /books of accounts.
Fenwick Goods Ltd (Fenwick Goods) is a small pharmaceutical company. It is perhaps best known for...
Fenwick Goods Ltd (Fenwick Goods) is a small pharmaceutical company. It is perhaps best known for its product Fenwick Air Fresh, as commonly used in many household bathrooms across the nation. Fenwick Goods has 3 directors, Jack, Jill and Jimmy, who are also significant shareholders as each of them hold around 25% of shares in the company. The remaining shares in Fenwick Goods are held by several other individuals and small companies. Jack, Jill and Jimmy founded Fenwick Goods back...
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